Archives for Dr. Sylvain Charlebois

Fall is always a good time to create new habits, and coffee chains know this. These days, they are desperately trying to find any excuse to get you to drink their java. Many chains are using National or International Coffee Day as a reason to offer their coffee at a discount, or even for free. For restaurant operators, there is no better hook than coffee to get repeat business. But given what is on the horizon, offering free coffee may no longer be an option for businesses.

Coffee demand around the world is shifting. Europe still accounts for almost one third of the coffee consumed worldwide, but China has doubled its consumption in just the last five years. As for Canada, numbers remain robust, as more than 90 per cent of adult Canadians drink coffee. Another probable factor is the fact that several recent studies suggest coffee is a healthy choice.

Coffee is the most traded commodity in the world, after oil. Coffee is grown in more than 60 countries and allows 25 million families worldwide to make a living.Despite not being a staple in any diet, coffee is big business. But there is growing consensus among experts that climate change will severely affect coffee crops within approximately the next 80 years. By 2100, more than 50 per cent of the land used to grow coffee will no longer be arable. A combination of effects, resulting from higher temperatures and shifting rainfall patterns, will make the land where coffee is currently grown unsuitable for its production. According to the National Academy of Sciences, in Latin America alone, more than 90 per cent of the land used for coffee production could suffer this fate. It is estimated that Ethiopia, the sixth largest producer in the world, could lose over 60 per cent of its production by 2050. This is only a generation away.

As climate conditions become critical, the livelihoods of millions of farmers are put at risk and production capacity is jeopardized. Other potential contributors to this predicted downfall are pests and diseases. These will migrate to regions where temperatures are adequate for survival, and most farmers won’t be ready. Many will simply choose to grow other crops. Others may attempt to increase their coffee production, but the quality will almost certainly be compromised.

Higher-quality coffee is grown in specific regions where the climate allows the beans to ripen at just the right time. Higher temperatures will undoubtedly affect coffee prices and quality. Thanks to the “Starbucks Effect,” the quality of the coffee we are now getting is much superior to that of just a decade ago. Good beans may become more difficult to procure in the future. Right now, coffee futures are valued at $1.28 per pound and are being exposed to downward pressures. At this rate, the record price of $3.39 per pound, set in 1977, could return in just a few years.

The coffee wars we are seeing are not just about gaining market shares and getting consumers hooked on java. They are also about how we connect with a crop that is under siege by climate change. Short of fighting climate change, we could be forced to alter our relationship with coffee. As current producing countries attempt to develop eco-friendly methods and embrace sustainable practices, Canada could be the next country where coffee is grown, not just roasted.

Within the next decade, with climate change and new technologies, producing coffee beans could be quite feasible in Canada.

So, if a coffee chain is offering free coffee, take it. It won’t be long before coffee could become a luxury. Okay, you may still be able to get free coffee, but not be the good stuff you’re getting now.

Dalhousie study finds nearly half of Canadians are interested in trying edible marijuana recreationally, but even more are concerned about risks for children.

A new study from Dalhousie University found that 46% of Canadians would try cannabis-infused food products if they became available on the market. 39% would be willing to try it in a restaurant, but only 20% said that they know enough about cooking with marijuana to do it at home. However, 59% worry about the risk that legalizing the use of recreational marijuana poses for children and young adults who will have increased access to it.

The preliminary study, entitled Cannabis-infused food and Canadian consumers’ willingness to consider recreational marijuana as a food ingredient was led by Dr. Sylvain Charlebois, professor in food distribution and policy at the Faculty of Management at Dalhousie University, and lead author of the well-known Canada’s Food Price Report. Dr. Simon Somogyi, associate professor in the Faculty of Agriculture at Dalhousie, co-authored the study.

A total of 1087 people took part in the survey, conducted in English and French over four weeks in August 2017.

The survey shows that the majority of Canadians (68%) are supportive of legalizing marijuana for recreational purposes, with British Columbians being the most supportive (79%) and people on the Prairies being the least (54%).

“People are interested in cooking with marijuana, but they don’t yet know how,” says Sylvain Charlebois. “However, younger people and those from higher income households are more likely to feel confident in their abilities.” Baked goods, oils and spices are among the products survey respondents said they’d be interested in trying.

Earlier in September, the Ontario government announced plans for selling and distributing recreational marijuana in anticipation of legalization. They plan to prohibit the sale of so-called “edibles,” although consumers would be able to make their own. “It’s short-sighted,” says Charlebois. “Our study shows that the majority of Canadians are willing to purchase them, and edibles are Health Canada’s recommended consumption form for cannabis.”

The survey also looked at Canadians’ perceptions of the risks involved with consuming cannabis-infused food products. 60% worried that the psychoactive effects would be too strong, and respondents, especially those with children, were concerned about the health risks for minors who might have more access to marijuana if recreational use is legalized. Only 13% considered cannabis a healthy ingredient.

Despite their curiosity, the study indicates that Canadians do not anticipate edible cannabis products taking the place of alcohol in their lives. “Almost 40% of respondents are willing to order a dish at a restaurant containing cannabis, but only a quarter believe it would replace an alcoholic drink,” says Simon Somogyi. This should be of comfort to the liquor industry which may be concerned that cannabis could be a direct competitor for its products once it becomes legal.”

Sylvain Charlebois, Dean of the Faculty of Management, Dalhousie University

Until recently, two things were certain in life: death and taxes. We can now add a third one: botching the promotion of a tax reform for political gains. Finance Minister Bill Morneau’s tax reform has been a communications disaster.

Claims about Ottawa’s intentions to revamp our tax system for small corporations have been ridiculous. Some predict a recession due to the changes proposed, while others declare the end of entrepreneurship as we know it. We should all take a collective deep breath and figure out how changes will affect our economy.

What needs to be underscored, though, is how Morneau’s vision for taxing small corporations will impact our agrifood sector.

Generally, the tax system is not really about pensions, legacy and social programs. Yet for a family-owned business, it is — and there are thousands of them in agrifood. In farming, Canada now has more than 43,000 incorporated farms, compared to around 23,000 incorporated farms in 2001.

Proposed tax changes penalize families

Despite the fact that we have fewer farms overall today than in 2001, more of them have opted to convert their operations into a corporation to provide an incentive to the next generation to take over the farm.

Proposed changes on capital gains would make it more expensive for a current family member to acquire the farm than for a third party. This is a critical piece of a highly complicated puzzle: keeping families and jobs in rural Canada is not an easy task and many agricultural producers are using our tax system wisely to secure the future of their businesses.

In food processing, retailing and in the food service sector, countless family businesses are wondering how family values immeasurably embedded in anything the corporation does can survive the next generation.

Income sprinkling is another issue Morneau is attempting to address. Presently, corporations can hire family members who work for the enterprise, which reduces the tax rate for everyone. Current rules about who can be compensated and at what level are ambiguous, at best. Morneau wants to change that, and for a good reason.

Several small corporations pay family members, who do not necessarily work for the company, to pay less taxes. This practice should stop but family businesses are really a different breed.

Defining tasks in a family-owned business can be difficult. Many of the contributions made by family members are ad hoc and not easily categorized. Recipes, tricks of the trade, family traditions all matter a great deal to whatever a small food outlet is doing. It is nothing like being an accountant, a doctor or a dentist.

A family business is like — well, a family. The enterprise survives daily by relying on favours and duties as assigned. On a family-owned farm, a restaurant or in a small food processor, job profiles are vague, at best.

Condescending, awful rhetoric

This political nightmare began in July when Ottawa launched a consultative process on how best to address tax planning practices that it believes are being used to gain unfair tax advantages. Individuals set up corporations to pay less in taxes in a variety of ways. Ottawa’s intentions are noble, but it is the bombastic tone used as a backdrop to promote the plan to Canadians that has been less than effective. Consultations end Oct. 2.

What has really caused many of the problems is the awful, condescending rhetoric coming out of Ottawa, labelling small business owners as a group of cheats and greedy tax evaders trying to dodge the system by using loopholes. That was simply insulting.

The government anticipates that the new regulations will bring in barely $250 million a year. For those thinking that the Liberals are looking for ways to increase revenues to pay for a ballooning deficit, they are wrong. This is really about politics, purely and simply.

Prime Minister Justin Trudeau’s egalitarian agenda to serve the so-called middle class is motivating the government to implement these changes. The tax regime needs change as some small corporations are using current tax rules to save money unjustifiably.

Agriculture, food sector at risk

This is not about being unwilling to pay more taxes. Rather, it is about the viability of an entire economic sector. Our tax regime should differentiate and give our rural economy and family corporations some level of immunity.

Ottawa should think of fiscal incentives the agrifood sector can use to grow. Right now, it is not clear how this can be achieved. As Ottawa is attempting to bring more fairness to our fiscal landscape and fix what is largely an urban issue, it shouldn’t penalize our agrifood sector.

Despite Morneau’s disgraceful performance as a tax reform salesman, changes will most likely happen, to the despair of many. Changes to our tax system are obscure concepts for most Canadians who have never had a company. Even Canadians with corporations would have a hard time understanding what is being proposed.

The confusion that has led to the hysteria we are seeing today is really the government’s fault and no one else’s. When it comes to taxes, painting everyone with same brush is unacceptable.

Ottawa will get its way in the end, but it should at the very least accommodate the unique intricacies of our agrifood sector.

Domino’s Pizza and Ford have paired up in a pilot project that will look at how humans interact with driverless food-delivery cars. Ann Arbor is home to thousands of students, an age group not likely to view this new technology with suspicion. But it could turn into a fascinating social experiment for the food industry.

Customers ordering through Domino’s will be able to track their delivery in real time by using a downloadable app on their smartphones. They receive a text message that gives them a four-digit code to use once the car arrives.

But it’s the final portion of the drive that could prove unpredictable for Domino’s. The driverless delivery vehicle could end up in the driveway, or near the curb. Customers may not want to go out to the car if it’s raining or snowing. Domino’s USA president Russell Weiner says these challenges are a major part of the experiment.

“We’re interested to learn what people think about this type of delivery,” he said in a recent statement. “The majority of our questions are about the last 50 feet of the delivery experience.”

No tipping attractive to students

Human behaviour can be difficult to predict at the best of times, especially when dealing with food. This will be the first time a food service or retail company has used driverless cars to interact with actual consumers.

The experience will certainly offer convenience for customers in a variety of ways. With the app, expectations will be managed, and quality of service — Domino’s key strategic focus — will be more consistent.

People can track their driverless pizza delivery with a smartphone app.Handout

That’s because delivery times will be streamlined, fewer pizzas will be damaged in handling mishaps and the customer won’t have to deal with tips — at least not for now. No tipping will reduce price points, making delivered pizzas more affordable. For cash-strapped students, that’s key.

For Domino’s, the business case for a driverless fleet is unquestionably strong. Lower insurance costs, lower fuel consumption, consistent delivery times, no thefts, controllable temperatures to keep food safe for customers so therefore less waste — the list goes on.

Domino’s delivers more than a billion pizzas annually, and has more than 100,000 drivers. Running a driverless fleet could save the company millions.

Restaurant operators won’t need to deal with the headache of hiring the right people for delivery, and delivery is an important means of expanding the brand outside their facilities.

Home delivery can be dicey

Most of us who have ordered home-delivered food have had mixed experiences.

Some drivers make convicted felons look like choir boys, causing customers to be hesitant about the food. But home delivery is no walk in the park for the drivers, either.

Drivers in the U.S. have told of finding themselves in unbelievably awkward situations, including being tipped with weed, being asked to eat with the customer to offer company, showing up during domestic disputes and being greeted by a naked customer as the front door opens.

Domino’s and Ford are testing whether people will go to the driveway or curb to get their pizza.Handout

There’s an endless list of unpleasant scenarios that would discourage anyone from contemplating home food delivery as a full-time job or even part-time job.

A humanless home food delivery experience, on the other hand, also offers a unique perspective on the market currency of convenience.

For years, price has been king. In study after study, price has trumped any other feature consumers were looking for in food service.

Consumers crave convenience and privacy

Younger generations, however, have a different take on convenience. Price remains a significant factor for higher revenues of course, but the constant quest for more convenience on both sides of the food continuum is now reaching the point of obsession.

Getting rid of delivery personnel is now a realistic approach. With driverless home food delivery, one could potentially get food delivered without seeing a single human being — a frightening thought for some, a reassuring one for others.

In the future, consumers could binge on their favourite junk food several times a week without the embarrassment of seeing the same delivery person.

No matter how you look at it, Domino’s and Ford are onto something. After all, driverless technologies are consistent with what Domino’s is all about.

The company has been successful over the years with its mastery of home delivery. Joining forces with Ford could make the company even more efficient.

Nonetheless not all of us needs Domino’s to get our food fix. Divorcing the human aspect from food is simply impossible for many food service companies — thousands of them, in fact. And thank goodness for that.

Amazon’s appetite for disruption

A man shops for avocados at a Whole Foods Market in New York on Aug. 28. The splashy price cuts Amazon made as the new owner of Whole Foods has attracted some curious customers.(AP Photo/Mark Lennihan, File)

Amazon is not wasting time in its acquisition of Whole Foods. Speed of execution, after all, is at the essence of the tech giant’s business model.

As soon as American regulators approved its acquisition of Whole Foods, Amazon said it would aggressively reduce the price of several organic staples in all of the 431 Whole Foods stores in the United States and Canada. They began doing so last week. Amazon’s playbook is about low margins and high-volume sales — for anything, including avocados, baby kale and grass-fed ground beef.

Technically, Whole Foods was in a free fall before its acquisition. Store traffic was shrinking, sales were sluggish and the company was having difficultly convincing shareholders that organic food sales are immune to economic cycles and pose a bright future for the company.

In fact, Whole Foods reinforced the notion that organics are, for the most part, exclusive and for the elite. Its nickname in the U.S., after all, has long been Whole Paycheck.

Organic groceries are more expensive, costing consumers almost twice as much as conventional food products. Margins are also a sweet deal for grocers, as they can be as much as five times what they would be for non-organic foodstuffs.

Amazon obviously knows all this and intends to make organics more affordable and more democratic. At the same time, it also expects to make a statement as a change agent in the grocery business, putting all the players in the industry on notice. Slumping stock prices for the major U.S. grocery chains show Amazon certainly has the market’s attention.

Walmart biggest seller of organics in U.S.

It’s not the first time a giant retailer has attempted to make its mark in organics.

Through its mastery of supply chain management, Walmart has made organics more affordable over the last decade or so, although with mixed results. When it committed to organics, Walmart wanted to offer more than 140 different organic products to its customers, but failed miserably.

Outside a Walmart store in Daytona Beach, Fla.(Shutterstock)

Walmart soon discovered that the realities of organic farming make accessibility more challenging. Over the years, it adjusted expectations by offering fewer but cheaper products. Today, Walmart is now the largest seller of organic food products in America.

But Amazon now has Whole Foods, the mecca of organic food, which gives it a huge advantage over Walmart. With its newfound access to an incredible organics ecosystem that encompasses well-established farms, suppliers and wholesalers, Amazon can execute its strategy almost instantaneously in ways that Walmart could not.

And so it begins, but it remains unclear how all this will affect the Canadian organic market.

If anything, Canadians could see organics go up in price too due to Amazon’s determination to introduce more Americans to organic products. With higher demand south of us, procurement could become more challenging for Canada’s major grocery chains even if our currency remains strong against the greenback. But over time, as Amazon increases its footprint in Canada, all this could change.

The American food distribution landscape is much different, especially today. With German-based Lidl and Aldi also expanding into the U.S., Americans may witness a continued food price war.

Food prices dropping in U.S.

Except for July, food prices in the United States have dropped for 18 months in a row, the longest stretch since the 1950s. Pricing always has a very direct, short-term impact on profitability. Over time, though, the survivors absorb the shocks coming from the competition and from lower prices.

Since Amazon has never played the high-profit, high-dividend game, this is a non-issue for the company. But in terms of organics, the Amazon/Whole Foods story will only make matters worse for Kroger, Safeway and other competitors.

Why?

Convenience rather than prices is the primary factor in organics. And so organic retailing coupled with online selling can only leverage Amazon’s position in the marketplace. The distribution power driving Amazon’s move on Whole Foods makes the online giant almost immune to any procurement challenges, a common issue in organics.

Meal kits next?

Amazon’s next move could involve meal kits.

For years, grocers have treated food services like meal kits as an afterthought. But given that some analysts are projecting the online food service market is likely to increase 15 times faster than the rest of the restaurant business by 2027, some are starting the move.

The first out of the gates in Canada was Metro. Metro’s brilliant move of purchasing the ready-to-cook meal delivery company MissFresh this summer is evidence that grocers are starting to see the potential, but it has been slow.

Amazon, however, does not move slowly.

Blue Apron, a U.S. meal kit provider, just announced it was reducing its sales force to better calibrate sales with capacity. Several meal kit start-ups have emerged and have done well, but no one has proven they can be sustainable for the long term.

Many have to spend an outrageous amount on marketing, and set very high price points for their products. It’s easy to see how Amazon could get into the meal kit business by using its massive data-driven strategies. Will Amazon bulldoze into Blue Apron’s territory?

Amazon is essentially about merchandizing convenience for all. Organics, meal kits — it’s all about convenience.

For years, Walmart mastered the concept of simplicity and one-stop shopping at a big box store. But Amazon is, quite frankly, betting on the indolent nature of mankind. And it’s winning.

Welcome to a new year of academic excellence. Whether you are a new or returning student, we look forward to your contribution within our community. You will be joining other like-minded individuals who share our vision of inspiring transformative solutions for society.

This year, the Faculty of Management marked its 50th year anniversary. Thank you to our engaged alumni. You make us proud. As the leaders and managers in the business sector, public sector, and civil society your influence within a complex global environment has been extraordinary.

Dalhousie’s Faculty of Management has a unique approach to education. We integrate four disciplines which encourages and promotes knowledge exchange: the Rowe School of Business, the School of Information Management, the School of Public Administration and the School for Resources and Environmental Studies. This allows us to collaborate, prosper and contribute within a wider milieu. Business education is more interesting and relevant if you bring business education beyond the borders of a normal business school.

In 2018, we will celebrate Dalhousie’s 200th anniversary, beginning this month until December 2018. We invite you to share your stories with us on CFAME Connection. We are witnessing the beginning of Dalhousie’s next century, an era that promises unimaginable possibilities and opportunities. This is the time to build upon Dalhousie’s 200-year legacy and inspire a new generation of students.

Dr. Sylvain Charlebois is Dean of the Faculty of Management at Dalhousie University in Halifax and Professor in food distribution and policy in Dalhousie’s Faculty of Agriculture. Dr. Charlebois is an award-winning researcher and teacher. His current research interest lies in the broad area of food distribution, security and safety. He is currently writing a fifth book on global food systems. Dr. Charlebois has graciously agreed to share his research in future posts.